NEWARK – Public Service Electric and Gas Company (PSE&G) is ready to begin work to protect and strengthen its electric and gas systems against severe weather conditions, now that the New Jersey Board of Public Utilities has approved a $1.22 billion settlement in the company’s Energy Strong proposal.

The BPU approval “means that we can begin to harden our systems against the kind of severe weather damage our infrastructure sustained in the past few storms,” said Ralph Izzo, PSEG chairman and CEO on May 21. “Our employees and contractors are ready to begin replacing vulnerable gas pipes, upgrading 29 substations and adding intelligence to our system to speed restoration when there are outages. We intend to work with regulators and other parties to consider other measures in our original proposal at a later date.

“While none of these improvements will be in place for this year’s hurricane season, we are pleased to put shovels in the ground and get started on this critical work so we are better prepared for the next storm season,” Izzo added.

Opponents agree to new plan

On May 1, PSE&G reached agreement with the Board staff, Division of Rate Counsel, AARP, labor unions and other participants in the Energy Strong filing, which has been pending since February 2013. The utility had sought approval to invest $2.6 billion during five years to harden its electric and gas systems in the wake of storms like Hurricane Irene and Superstorm Sandy.

Elvin Montero of the Chemistry Council of New Jersey, and spokesman for the NJ Coalition for Affordable Power, issued the following statement after the approval was granted:

“The New Jersey Coalition for Affordable Power (NJCAP) joins our coalition partners, including the New Jersey Large Energy Users Coalition (NJLEUC) and AARP, in supporting the settlement agreement regarding PSE&G’s Energy Strong proposal and adopted by the NJ Board of Public Utilities (BPU) today (May 21).

“Since the formation of our coalition a year ago, our members fully understood — and in no way minimized — the importance of continuous, reliable electric service and the need for a utility infrastructure capable of reasonably withstanding extreme weather events such as Superstorm Sandy and Hurricane Irene. But throughout the process we remained concerned that PSE&G failed to propose the kind of program that would reasonably improve our utility infrastructure in a cost-beneficial way.

“We commend the BPU commissioners and staff for recognizing the shortfalls of the Energy Strong proposal as originally filed, requiring further scrutiny of the proposal and carrying out a process that allowed all parties to fully examine the petition with the support of independent experts. NJCAP is pleased that the settlement will advance solutions designed to improve reliability for electric and natural gas customers, while putting in place important consumer protection criteria that holds PSE&G accountable for the $1 billion it is now authorized to spend on specific infrastructure improvement projects. It is anticipated that the $1 billion cost of this program will be more than offset by the expiration of current PSE&G charges over the next several years.

“New Jersey ratepayers already pay among the highest utility rates in the country. The BPU recognizes, with this settlement, that utility proposals to increase rates for infrastructure improvement efforts must be evaluated through traditional ratemaking procedures to ensure such proposals are cost-effective and serve the public’s interest.”

“While there is no question that a $1 billion proposal still gives this coalition pause on the extraordinary amount of money to be spent on infrastructure upgrades underwritten by ratepayers, the NJCAP remains confident that the BPU used its authority to satisfy its statutory obligation to protect the interests of New Jersey ratepayers, and they have fulfilled this duty in an appropriate and commendable manner.”

What the work entails

With the Energy Strong approval by the BPU, PSE&G will make the following investments during the next few years:

• $620 million to protect, raise or relocate 29 switching and substations that were damaged by water in recent storms.

• $350 million to replace and modernize 250 miles of low-pressure cast iron gas mains in or near flood areas.

• $100 million to create redundancy in the system, reducing outages when damage occurs.

• $100 million to deploy smart grid technologies to better monitor system operations to increase our ability to more swiftly deploy repair teams.

• $50 million to protect five natural gas metering stations and a liquefied natural gas station affected by Sandy or located in flood zones.

PSE&G estimates that the work approved by the BPU will create more than 2,000 jobs, which will bolster the state’s economy.

“We expect to hire more than 300 additional employees this year, about half of them in union positions,” Izzo said. “The infrastructure investments also are expected to put skilled contractors and laborers to work installing new gas mains, raising or relocating substation equipment and erecting water barriers.” The PSE&G jobs will include relay technicians, substation mechanics, engineers, environmental analysts and project managers.

By year end, the utility expects to replace about 88 miles of low-pressure, cast iron gas mains that sustained water damage in either Irene or Sandy. PSE&G representatives are reaching out to municipal officials in Bergen, Essex, Hudson, Mercer, Middlesex, Passaic and Somerset counties to discuss the timetable for the work and inform residents about the construction activity.

In addition to replacing the cast iron mains with ones made of plastic, PSE&G will upgrade older service lines with plastic piping that brings gas to individual homes and businesses. The utility will apply for road opening permits before work can begin in a particular municipality, and work with local officials to minimize traffic and other disruptions.

PSE&G is expected to begin raising or fortifying substations later this year, once engineering plans are finalized. The work schedule will also depend on material availability and the issuance of local construction permits. The 29 substations slated for hardening are located in Bergen, Essex, Hudson, Mercer, Middlesex, Passaic, Somerset and Union counties.

Public Service Electric and Gas Co. (PSE&G) is New Jersey’s oldest and largest regulated gas and electric delivery utility, serving nearly three-quarters of the state’s population. PSE&G is a subsidiary of Public Service Enterprise Group Inc. (PSEG) (NYSE:PEG), a diversified energy company (